Opinion/Feature
How Ponzi Schemes Are Destroying Lives In Nigeria
Over the last decade, Nigeria have, increasingly been plagued by the rise of Ponzi schemes, which have lured thousands of unsuspecting investors with the promise of high returns on their investments.
Ponzi schemes are fraudulent investment schemes that promise high returns with little or no risk to investors.
These schemes have become a common occurrence for decades in Nigeria with many Nigerians victims to these fraudulent investment schemes.
The scheme pays returns to earlier investors using the capital of new investors rather than generating profits from legitimate investments.
According to Nigeria’s Securities and Exchange Commission, available data generated by the Norrenberger Financial Investment scheme last month, suggests that Nigerians have lost over N300bn to ponzi schemes over the last five years.
One of the most notorious Ponzi schemes in Nigeria, MMM, was launched in 2016 and promised investors returns of up to 30 percent per month. At its peak, MMM had over three million participants in Nigeria alone, with some estimates suggesting that the scheme had attracted as much as $50 million in investment.
Beyond the numbers, Biztellers looks at how this phenomenon have destroyed lives of families that have fallen victim over the years.
Many victims of Ponzi scheme have lost their lives due to depression, those who survived ,have become shadows of their former selves. Such is the case of two brothers, Ifeanyi Eze and Promise Eze who are yet to recover from their depressed condition after a failed investment worth millions of naira sometime in 2021.
According to the mother of the victims, she explained that both boys had invested five million naira, in a Ponzi scheme and the money was supposed to be for a business startup. They were assured of good returns but they were disappointed as the scheme crashed and nothing was learnt of it afterwards.
In her words: “I am in deep sorrow from what happened to my only two sons. I have tried everything medically and otherwise to address the problem but it has proved abortive. It started when they received the sum of five million naira from a relation to start a business but one afternoon, I saw them making some calculations with one of their friends. I didn’t know that these boys were planning their way to their current situation because after some months, we discovered that they had gambled with that money.
“After much interrogation and findings, we discovered that they had invested that money in a network and as soon as they invested the money, the platform crashed. I was very mad at them. When they got to know about the situation that the scheme had crashed and had no way to communicate with the company, my boys went into serious depression.
“They mostly stayed indoors. This happened for months until we began to notice that Ifeanyi would be speaking loudly to himself. We have tried several medications which didn’t help and this continued for a very long time until one day when he got so angry, stripped himself naked and ran away from the house. He was however brought back home with the help of friends.
“Promise on his part also talks to himself and does nothing although he has been trying to come out of the situation. We have spent a lot of money on drugs just to redeem these children but we have not been successful. The situation keeps getting tougher. When we went to the hospital and the boys were examined, the doctor explained that their current condition was as a result of depression following a failed investment which affected them.
Another case is that of one, Mrs Chineye Chibuzor, who had invested about 15 million naira into a Ponzi scheme that swindled scores of Nigerians in 2021. According to her, the scheme appeared different and promising at the time so she decided to invest 15 million into it.
She said, “I was honestly deceived by what I saw. The founder appeared to be a man of God who drew many of his workers to Christ.
“But, shockingly, just when I invested 15 million naira which was my second investment, everything went into thin air. Since that investment, my marital life has not remained the same because my husband who stays abroad warned me and asked me to use that money for business but I was deceived. It took a lot from my marriage because after the whole thing my husband changed his attitude towards me and ever since I have been trying to work things out”.
She, cautions Nigerians against quick money “and stay away from anything that seems too good to be true.”
A former student of the University of Port Harcourt, Ademola Mutiu, who also fell victim to the ponzi scheme said, “I actually invested money during the time that many Nigerians were swindled by a very popular ponzi scheme.
“Since that time I have not recovered till now. I have been damaged. I was trying to double my school fees, so I invested in it and the scheme crashed. I could not raise more money to pay for my school fees because my parents were very angry with me.
” I could not get the money early enough so the vice chancellor of my school asked those who couldn’t pay to leave and our admissions were withdrawn. Since then my parents asked me to go into tailoring and that is what I have been doing since then.”
Another youth, a writer, Femi Ayajo said, “My elder brother warned me about stuffs like that: The first one in 2019, I lost #2500 in NNU forum. I got people to join. I wanted the referral bonus and the daily login bonus. 20k was coming at the end of the month. I already planned how I’ll upgrade my wardrobe and buy better food. I was so confident it won’t crash. My brother laughed at me and said, “You’ll soon learn.” I no hear word.
“Sadly, on withdrawal week ooo, I requested for withdrawal, till today, I no see shi shi. What pained me the most was my friend that opened like 4 accounts. I opened 2 accounts. I read daily news tire . I still no hear word. December 2021, I invested 10k in one football stuff like that.
“This one looked sure like every other ponzi-scheme but omoooooooooo, na mumu I be. After I got paid by a customer, I took 10k out of what I had and forgot it there. This one didn’t pain me like the first one because I wasn’t doing the work.
“I did it because everyone was talking about it and I didn’t want to miss out of the opportunity. Close friends and even church members don use this one gbope. People have used it to start businesses. But las las, victim no go learn. I bear the pain in this one like the man that I am.”
Ayajo further advised Nigerians against ponzi scheme, he said: “There’s no cheat code to wealth. Go learn a high-income skill.”
A former corp member, Opeyemi Hamzat also said: “Well, it started when someone introduce me to one Ponzi website where I will be able to earn a certain amount daily by reading news and sharing it on my social media pages, logging in daily, and some other things( which I can’t recall), I paid an activation fee of 5000 which is a one-time payment and to also refer people as it is necessary for my withdrawal.
“From there on, I was told my earnings will be paid at the end of each month once u reach the monthly withdrawal target. At the end of the month, I couldn’t withdraw my earnings, that is when I know that I have been scammed.”
Biztellers also spoke with an “expert” investor in Ponzi scheme Etim Unyime, who is both beneficiary and victim of ponzi scheme, he said: “I’ve been scammed and that’s it. I can’t begin to recall the amount because it’s much. I’ve lost over $6k to ponzi. I’ve also made more than that after it happened.
” So it’s relative. I’ve actually made more than I’ve lost but the most I’ve lost at once is $6k. In others, I get back my capital investment before it gets busted. The key is not to be greedy.”
Despite the sad stories of most of it’s victims, ponzi schemes continue to thrive in Nigeria and many more such schemes continue to spring up with the sole intent of defrauding.
The success of MMM and other Ponzi schemes in Nigeria can be partly attributed to the country’s economic situation. Nigeria has been facing a number of economic challenges in recent years, including high unemployment, inflation, and a scarcity of foreign exchange.
These conditions have left many Nigerians struggling to make ends meet, with some turning to high-risk investments in the hope of making quick profits.
Another factor contributing to the success of Ponzi schemes in Nigeria is a lack of financial literacy. Many Nigerians are not well-educated about the risks and rewards of investing, and are easily swayed by promises of high returns.
The culture of greed that pervades the Nigerian society is another factor that has contributed to the success of Ponzi schemes.
In a country where wealth is highly prized and social status is often tied to one’s material possessions, the promise of quick profits can be alluring.
Some Nigerians are willing to take on significant risks in order to achieve financial success, even if it means participating in a scheme that is clearly fraudulent, diving into it with all their earnings.
Nigerian celebrities coming out to promote this fraudulent schemes, knowingly misleading their followers and encouraging them to invest in a scam that will inevitably collapse, causing significant financial harm to them, is also another factor contributing to the popularity of Ponzi schemes in the country. From A-rated celebrities to B-rated celebrities, various Nigerian celebrities have been guilty of promoting these schemes over the years.
Despite the prevalence of Ponzi schemes in Nigeria, very few perpetrators of these fraudulent schemes have been prosecuted.
This is primarily due to a lack of effective regulatory frameworks and law enforcement agencies that are equipped to tackle financial fraud.
Many Ponzi scheme operators in Nigeria operate without any form of licensing or regulation, making it difficult for authorities to track their activities.
The lack of regulatory oversight allows these operators to continue their fraudulent activities with impunity, and they are often able to defraud thousands of unsuspecting investors before being caught or they go scot free.
Also, another reason Ponzi scheme operators in Nigeria have evaded prosecution is the slow pace of the legal system. Cases can drag on for years in Nigerian courts, and by the time a verdict is reached, the scheme operator may have disappeared or died.
A perfect example of this is Ovaiza. No one knows the outcome of her case up until now. Furthermore, the burden of proof in financial fraud cases can be challenging to meet, and evidence can be difficult to obtain.
However, the national assembly recently proposed jail terms for Ponzi scheme promoters.
The bill which is only awaiting presidential assent to become law was stated by the Senate President, Ahmad Lawan at the plenary, that the bill is expected to protect investors, adequately regulate the market, reduce systemic risks as well as provide for more stringent punishment for operators of Ponzi schemes.
While this is good news, without fixing the issue of lack of effective regulatory frameworks, a slow legal system, corruption within law enforcement agencies, it will still be difficult for financial fraudsters operating Ponzi schemes in Nigeria to be brought to justice.
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Opinion/Feature
UNCOMMON SCHOLAR, EXCEPTIONAL ADMINISTRATOR: MY TRIBUTE TO PROF. OLOYEDE AT 70
By President Bola Tinubu
As Professor Ishaq Oloyede turns 70 tomorrow, October 10, I pay a special tribute to this astute administrator, educator, author, and scholar, currently the Joint Admissions and Matriculation Board (JAMB) Registrar.
As the former Vice Chancellor of the University of Ilorin, Prof. Oloyede’s invaluable contributions to the nation through academia and public-sector administration have significantly impacted the academic community.
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His impactful tenure at the University of Ilorin, during which he introduced landmark ideas and innovations that helped the institution attain enviable heights, is on record.
Through patriotic dedication and commitment to his craft, Prof Oloyede imparted knowledge and character to thousands of students who underwent his teaching during his glorious and impactful academic career.
Indeed, the bedrock of development lies in education. Developing nations, including Nigeria, are in dire need of more scholars like Prof. Oloyede. His selfless sacrifices and innovative approaches to learning and leadership give hope for a brighter future.
Perhaps more remarkable is Prof. Oloyede’s transformative leadership at JAMB. He pioneered and sustained a series of reforms and technological innovations that have made the admission process in Nigeria transparent and credible.
In his eight years of stewardship at the board, thus far, Prof. Oloyede has demonstrated an uncommon commitment to financial integrity and accountability in public service. He has also raised the bar in administration and management.
I am proud of Prof. Oloyede’s accomplishments.
The nation owes the Professor of Islamic Jurisprudence a debt of gratitude for transforming JAMB, traditionally a non-revenue-generating government agency, into a consistent contributor to the national treasury through efficient financial management. His contributions to JAMB are invaluable and greatly appreciated.
On this occasion of his 70th birthday, I join members of the academic community, students, JAMB staff, and well-wishers in celebrating this scholar who, in words and deeds, has also done a lot to propagate the Islamic religion.
I pray that Almighty Allah will continue to honour the distinguished professor with health, wisdom and strength to serve the nation for many more years.
Opinion/Feature
Clarification On NNPCL Refinery Operations
By Sen. Heineken Lokpobiri PhD
My attention has been drawn to statements made by Engr. Kamoru Busari, Director of Upstream in the Ministry of Petroleum Resources, who represented me at a recent conference in Lagos. I wish to categorically state that the claim that I directed the Nigerian National Petroleum Company Limited (NNPCL) to stop running its own refineries and focus solely on equity participation in other refineries is false. This does not represent my position as Minister overseeing the oil sector, nor does it reflect the stance of the Federal Government.
It is important to clarify that NNPCL is a company governed under the Companies and Allied Matters Act (CAMA), with a functional board and management. The Ministry of Petroleum Resources does not control or run NNPCL, as it operates independently like any corporate entity.
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The oil and gas sector is fully deregulated, and the Nigerian government remains committed to promoting in-country refining. We encourage companies, including NNPCL, to operate independently, following global best practices. While we provide strategic guidance, we do not interfere directly in the operations of these companies.
I reaffirm our commitment to supporting the growth and independence of NNPCL, ensuring that its operations are in line with international standards for efficiency and transparency and profitability.
Sen. Heineken Lokpobiri PhD, Minister of State Petroleum Resources (Oil), wrote from Abuja, Nigeria